President Joe Biden asked Congress on Wednesday to adopt legislation prohibiting so-called junk fee, which are hidden prices attached to airline and concert tickets, vacation packages, and television and telephone bills.
Biden’s proposal would prohibit excessive fees for concert and sporting event tickets, which can exceed 20% of the face value of a ticket; prohibit airlines from charging extra fees for family members to sit alongside their young children; eliminate “exorbitant” fees for canceling television and telephone packages early, which can exceed $200; and require hotels and resorts to disclose nightly resort fees to consumers upfront.
What Is Junk Fee Protection Act?
According to the administration, these and other junk fees cost Americans billions of dollars each year, and Biden described the four fees targeted by the legislation.
The Junk Fee Protection Act, designed in collaboration with the Consumer Financial Protection Bureau, would target four categories of exorbitant fees:
- the excessive concert, sporting event, and entertainment ticket prices online
- Flight surcharges for families traveling together
- excessive early termination costs for television, phone, and internet services
- unexpected resort and destination fees
In brief remarks prior to the meeting, Biden referred to credit card late fees in particular as “a junk fee if there ever was one,” claiming that the CFPB’s new guidance would cut these penalties.
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Firms Exploit Loophole
The Consumer Financial Protection Bureau is planning to propose a rule that would prohibit credit card firms from charging late fees that exceed the cost of collecting late payments, which the agency believes will save customers $9 billion per year.
Biden called on Congress to pass the junk fee legislation, saying it would give “hardworking Americans just a little bit more breathing room.” It’s part of a plan, he added, to build “an economy that’s competitive and an economy that works for everyone.”
Before the announcement, CFPB Director Rohit Chopra stated that “over a decade ago, Congress banned excessive credit card late fees.”
Another cost category that irritates many customers is that of online event tickets, for which additional fees are frequently expensive — and typically appear late in the checkout process, when a buyer is about to make the purchase.
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